The world’s biggest Bitcoin fund outperformed other risk assets Monday as a weekend deadline for its parent company came and went without any fireworks.
(Bloomberg) — The world’s biggest Bitcoin fund outperformed other risk assets Monday as a weekend deadline for its parent company came and went without any fireworks.
The $10.7 billion Grayscale Bitcoin Trust (ticker GBTC) soared 12% to start the week, its largest one-day jump since February 2022. The fund has done better than Bitcoin itself as of late, narrowing the discount to its net-asset value to 44% from a record of 49% reached last month.
While Monday’s rally matched the risk-on sentiment in equity markets, it followed a Sunday deadline set by Gemini Trust Co. co-founder Cameron Winklevoss for Digital Currency Group founder Barry Silbert to “publicly commit to working together” to fix what Winklevoss says is a $900 million hole created by crypto lender Genesis — also owned by DCG — halting redemptions in November.
While Winklevoss didn’t specify what would happen if no agreement was reached by Jan. 8, the open letter further fanned fears that Genesis would file for bankruptcy. That possibility was raised by the crypto brokerage itself in seeking to raise fresh capital in November. That’s fueled concerns over the health of parent DCG, and the future of Grayscale’s Bitcoin trust — the “cash cow” of Silbert’s empire.
Even still, furor is building over GBTC’s deep discount to the Bitcoin it holds, a product of the fact that the fund’s structure doesn’t allow for share redemptions. Frustration with Grayscale’s handling of that dislocation is the basis of a lawsuit from Fir Tree Capital Management, as well as a fledgling activist campaign.
Meanwhile, momentum is building behind the Redeem GBTC Campaign launched by crypto industry veteran David Bailey last month. Bailey, the chief executive of Bitcoin Magazine and founding partner of crypto hedge fund UTXO Management, said in a tweet Sunday that nearly 20% of GBTC shareholders have joined the effort. He didn’t elaborate.
According to its website, the goal of the campaign is to reduce GBTC’s 2% management fee, find a path to creating redemptions that “minimizes impact on the Bitcoin market” and ultimately oust Grayscale as the trust’s overseer.
GBTC shares tumbled 76% last year, while Bitcoin slumped 64% during the same period.
(Updates with closing share information.)
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